Many of the promises Liz Truss made before her election as UK prime minister would have sounded good to libertarians, classical liberals, and conservatives. Yet she blew it, discrediting those ideas for a generation.
Maybe it’s my selective memory, or my youthful awe of world leaders back in the day, but it seems that we’re almost universally ruled by populist buffoons and hapless idiots these days.
It seems to me there once was a time when politicians might have been good, or they might have been evil, but at least they were competent and respected. They had gravitas. There were notable exceptions, of course, but the majority, on both the left and the right, at least seemed solid.
That cannot be said for the vast majority of world leaders today. The colour of the political packaging might differ, but once you unwrap them, they’re all clowns inside.
Clowns
The US has nothing better to offer than a doddering, somewhat creepy old leftie with signs of senile dementia, on one side, and a bombastic populist with the morals of a card shark and enough personality disorders to be a psychiatry case study, on the other.
In South Africa, government is riddled with old-school communists, corrupt looters, and incompetent patronage appointees, while the political opposition is populist, power-hungry, petty, or apt to shoot itself in the foot repeatedly for lack of discipline and half-decent public relations.
Elsewhere in the world, leaders likewise inspire little confidence, ranging from populist authoritarians to socialist ideologues, with the occasional narcissistic and insecure but dangerous empire-building warmonger thrown in.
Everywhere, the quiet, competent governance of liberal democrats seems out of fashion.
Promises
On the face of it, the positions espoused by Liz Truss before her election as the blustering Boris Johnson’s successor at the head of the Conservative Party and the UK’s government, seemed a tempting selection of free market ideas.
She promised an emergency budget to stimulate growth as a means to pay for government expenditures and public services.
She promised reversing corporate tax hikes, reversing the National Insurance rate rise, opposing windfall taxes, removing green levies from energy bills, and reviewing (read: cutting) a raft of taxes.
Free-market eyebrows might have been lifted by her stated commitment not to cut spending.
Frankly, the mini-budget her finance minister, Kwasi Kwarteng, delivered 17 days into her term of office shouldn’t have surprised anyone.
She certainly wasn’t flawless, from a policy perspective. There were issues which should have raised red flags for liberals and libertarians (though not necessarily for conservatives), such as a tough-on-crime stance that sought to expand the use of random stop-and-search operations, and conflicting positions on immigration. On one hand, she didn’t want to cap immigration, but on the other she wanted to prohibit asylum seekers from working and continue to ship unwanted migrants off to third countries like Rwanda.
Deer in the headlights
The mini-budget that delivered on many of her pre-election promises was rapidly shot down by just about everyone, including financial markets. To paraphrase Truss’s response in the words of Margaret Thatcher, she was not for turning. She only wished they had ‘laid the ground better’.
That didn’t stand, and she soon began a series of embarrassing u-turns. Her popularity plumbed depths lower than those of the hapless oaf she replaced. She threw Kwarteng under the bus a mere 38 days into his term of office, in favour of the rather bland Jeremy Hunt, who is painstakingly reversing everything Kwarteng did.
Facing the media like a deer in the headlights, she sputtered that she regretted the loss of a chancellor who was totally committed to her vision to deliver a high-growth, low-tax economy, but replaced him with another chancellor who, as luck would have it, is totally committed to her vision to deliver a high-growth, low-tax economy.
She looked like she genuinely expected the assembled media to buy this twaddle. When the only questions were when she’d be stepping down herself, she literally ran away.
Some Thatcher figure, she is.
Thatcher figure
She could never have been a reincarnation of the Iron Lady. Although her country faces similar discontent as it did in 1979, at least Thatcher could blame it on the socialist policies of the Labour Party and promise a new kind of politics. Truss’s Conservatives have been in power for 12 years. The malaise is all of their own making.
Truss, by her incompetence and cack-handed approach, has severely damaged the credibility not only of her party, but of free market ideology in general.
The idea of lowering taxes to stimulate higher growth might be anathema for a generation, now, and that is a tragedy.
To be fair, Truss isn’t the only politician to give free markets a bad name in recent years. The alt-right populists have been doing an excellent job of it. Even libertarians themselves have worked tirelessly to give libertarianism a bad name.
Art of the possible
‘Politics is the art of the possible, the attainable — the art of the next best,’ said Otto von Bismarck, the 19th-century German chancellor. His pragmatism was trumped by the even more cynical economist John Kenneth Galbraith: ‘Politics is not the art of the possible. It consists in choosing between the disastrous and the unpalatable.’
Either way, no matter how sound your principles, the best way to guarantee you’ll never get to implement them is to stride in, gung-ho, demolishing everything in your path to decree a glorious new utopia.
Economic liberalisation is necessary, but it must be done gradually, and with care. Economic policies must be crafted not by enthusiastic young ideologues, but by sober, experienced experts with a good grasp of what is possible, politically speaking.
Don’t start with radical measures like unfunded tax cuts for the rich or for corporations. Start by exempting small businesses from tax, and cutting taxes on the lower- and middle classes and on medium-sized businesses.
Whatever you do, do not make things worse for the poor and the middle classes, even if you believe it’s for their own eventual good. This is politics, not some idealistic theoretical exercise.
Once there is some momentum in small-business growth and poor- and middle-class standards of living, then start tackling taxes on the rich. The rich are the key to capital formation and employment. Protecting them from rapacious taxation really is critical for long-term growth, and long-term growth really is the only sure way out of economic malaise.
But don’t be stupid and reinforce the perception, created by the enemies of liberalism, that free-market economics panders to the rich at the expense of the poor.
If you do start fiddling with taxes on the rich, leave the top marginal tax rate alone at first. Start with taxes that directly affect capital formation, such as those on dividends, capital gains, property transfers, and deceased estates.
But again, don’t even look at the rich before you’ve shored up the welfare of the poor and the middle classes. Only once the voting masses can see that things are starting to move in the right direction, will they trust you enough to liberalise parts of the economy they don’t fully understand.
Social welfare
If, say, a new, more liberal party were to take power in South Africa, they could not start by repealing social grants, for example.
In an ideal libertarian world, social welfare would be minimal or non-existent. Instead, the private sector would be wealthy enough that charity could take care of the essential needs of the poor.
As a matter of principle, charity is compatible with economic freedom, while taxing the rich to give to the poor is a fundamental violation of property rights.
Yet even before the rise of welfare states in the developed world, while private charity was a major force, it isn’t clear that they supported more than a fraction of the deserving poor. With today’s far larger populations, it is at least questionable whether private charity can rise to the occasion.
You might argue that without free services offered by the government, the private sector could offer low-price services for the poor, and theoretically, that might be true. But it has not been empirically tested, and explaining to the poor that you’re cutting their healthcare or education or housing or other benefits is very bad politics, even if you’re right.
As much as it is a problem that more than half the South African population is on welfare, the only way to remedy that is to create space for the sort of growth that will reduce unemployment and reduce the demand for grants, free healthcare, free education and free housing.
Much of that growth will have to come from small businesses and the middle class, so start by reducing their taxes. The more money the ordinary majority get to keep, the more they can spend or reinvest, to grow their small businesses to become significant employers.
Buy-in
Instead of having a flunky write an ‘economic impact assessment’ on a new law that only says what their political masters want to hear, employ scenario planners for sketching out all the possible outcomes of a particular intervention. Publish all of them, and explain why you’re making the decisions you are making.
Get the public, and the markets, to buy into your growth plan before you foist it on them.
There is nothing more frustrating than watching some eager young politician with reasonable free-market instincts but no experience barging in and declaring that they’re saving their country by first helping the rich.
Liz Truss is a victim of the echo chambers in which radical reform, rapidly enacted, will be a panacea for all the ills of socialism and big government.
In the real world, you need to convince not only your fellow-ideologues, but all the voters, many of whom do not share, or even understand, your ideology.
To take them along with you, that is ‘the art of the possible’. And that might require some ideologically unpalatable decisions, if there is to be any hope of avoiding outright disaster. It certainly requires a level of competence and political maturity that appears to be sorely lacking in world leaders these days.
[Image: https://www.flickr.com/photos/192333790@N05/51960642015]
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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